Financial Data and Key Metrics Changes - Revenue for Q2 FY 2026 was $861 million, representing a 13% year-over-year growth, while operating profit was $130 million with an operating margin of 15.1% [22][28] - Subscription services revenue reached $415 million, up 15% year-over-year, accounting for 48% of total revenue [26] - Total remaining performance obligations (RPO) grew 22% to $2.8 billion, reflecting robust renewals and new commitments [26] - Total gross margin remained strong at 72.1%, with subscription services gross margin at 76.5% [27] Business Line Data and Key Metrics Changes - Strong performance was noted across the entire portfolio, particularly in FlashBlade and core software and services offerings like Evergreen One, Cloud Block Store, and Portworx [22][24] - Total contract value (TCV) sales for Storage as a Service offerings grew 24% year-over-year to $125 million [24] - The FlashBlade E family showed strength, contributing to overall product gross margin improvement [88] Market Data and Key Metrics Changes - U.S. revenue was $577 million, growing 7%, while international revenue was $284 million, growing 26% year-over-year [27] - More than 300 new customers were added, maintaining a 62% penetration rate in the Fortune 500 [27] Company Strategy and Development Direction - The company is focused on the enterprise data cloud architecture, which is transforming how organizations manage data, emphasizing the shift from traditional siloed storage to a software-defined model [9][11] - Continued investment in partnerships with hyperscalers, including Meta, to enhance direct flash technology and expand market presence [25][17] - The introduction of a guidance range for financial metrics aims to align with industry practices and provide flexibility for growth opportunities [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to extend industry leadership despite a variable macro environment, citing strong execution and planning [20] - Positive momentum is expected in the second half of the fiscal year, driven by strong demand signals and an increasing pipeline of large deals [110] - The company anticipates revenue for FY 2026 to be in the range of $3.6 billion to $3.63 billion, representing a 14% year-over-year growth at the midpoint [31] Other Important Information - The company reported a strong free cash flow performance of $150 million, with a free cash flow margin of 17.4% [29] - A new partnership with Nutanix is expected to enhance customer interest and scalability in virtualization environments [58] Q&A Session Summary Question: What is driving the acceleration of growth in the back half of the fiscal year? - Management noted broad-based strength in product lines and improved visibility into the pipeline, contributing to confidence in growth forecasts [36] Question: How has the relationship with Meta evolved? - The relationship is progressing as expected, with deployments on track and revenue recognition beginning [42] Question: What factors contributed to the sequential gross margin improvement? - Management attributed the improvement to revenue mix, product mix, and pricing discipline, with Meta's contribution being less material than anticipated [48] Question: How is the engagement with other hyperscalers progressing? - Early-stage engagements are ongoing, with technology assessments and proofs of concept underway, but still in the initial phases [64] Question: What are the long-term expectations for Meta's contribution? - Management expects to achieve one to two exabytes of deployment this fiscal year, with potential for double-digit contributions in the next fiscal year [70] Question: How should the split between product versus subscriptions be viewed? - Management indicated that both product and subscription revenues are expected to grow, with subscription gross margins being higher than product gross margins [98]

Financial Data and Key Metrics Changes - Revenue for Q2 FY 2026 was $861 million, representing a 13% year-over-year growth [20] - Operating profit was $130 million, resulting in an operating margin of 15.1% [20] - Subscription services revenue reached $415 million, up 15% year-over-year, accounting for 48% of total revenue [25] - Total remaining performance obligations (RPO) grew 22% to $2.8 billion [25] - Free cash flow was $150 million, with a free cash flow margin of 17.4% [28] Business Line Data and Key Metrics Changes - Strong performance in FlashBlade and core software and services offerings, including Evergreen One, Cloud Block Store, and Portworx [20][6] - TCV sales for Storage as a Service offerings grew 24% year-over-year to $125 million [23] - Product gross margin rose to 68%, aligning with long-term expectations [26] Market Data and Key Metrics Changes - U.S. revenue was $577 million, growing 7%, while international revenue was $284 million, growing 26% year-over-year [26] - The company added over 300 new customers, maintaining a 62% penetration of the Fortune 500 [26] Company Strategy and Development Direction - The company is focused on the enterprise data cloud architecture, which transforms data management for organizations [9][13] - Continued emphasis on modernizing IT environments, including partnerships with hyperscalers and financial institutions [11][15] - The introduction of a guidance range for financial metrics to align with industry practices and allow flexibility for growth opportunities [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum and the macroeconomic environment, indicating a positive outlook for the second half of the fiscal year [36][110] - The company anticipates revenue growth of 14% year-over-year for FY 2026, with Q3 revenue expected to be between $950 million and $960 million [29][30] Other Important Information - The company recognized its first revenue from a strategic co-engineering effort with Meta during Q2 [24] - The balance sheet remains strong with $1.5 billion in cash and investments [27] Q&A Session Summary Question: What is driving the acceleration of growth in the back half of the fiscal year? - Management noted broad-based strength in product lines and improved visibility into the pipeline, contributing to confidence in forecasts [35] Question: How has the relationship with Meta evolved? - The relationship is progressing as expected, with revenue recognition beginning and confidence in achieving the forecasted deployment of one to two exabytes [40][42] Question: How much of the gross margin improvement was due to Meta shipments? - Management indicated that while Meta contributed to gross margin improvement, the majority came from product and revenue mix, as well as pricing discipline [48] Question: What are the expectations for the partnership with Nutanix? - The partnership is generating strong customer interest, with plans for general availability by the end of the year [57] Question: How are early engagements with other hyperscalers progressing? - Engagements are progressing well, with technology assessments and proofs of concept underway, but still in early stages [62] Question: What are the demand drivers observed in the quarter? - Demand was steady with above-average linearity, indicating strong macro and competitive environments, along with an increasing willingness from customers to expand their needs [110]

Summary of Pure Storage Conference Call Company Overview - **Company**: Pure Storage - **Industry**: Data Storage Solutions Key Opportunities and Strategic Focus - **Enterprise Growth**: Pure Storage sees significant growth potential in the enterprise sector, focusing on expanding its portfolio and addressing a full suite of enterprise storage needs [4][5] - **AI Integration**: The company is positioned as a leader in providing a comprehensive suite of AI storage solutions, catering to both small and large-scale environments [5] - **Hyperscaler Engagement**: Pure Storage has been actively engaging with hyperscalers, transitioning from initial discussions to design wins and production [5][6] Hyperscaler Market Insights - **Infrastructure Design**: Hyperscalers design their infrastructure stacks holistically, integrating compute, networking, storage, and software, which differs from traditional enterprise environments [6][7] - **Flash Adoption Lag**: Historically, hyperscalers have lagged in adopting flash technology compared to enterprises, but are now recognizing the limitations of hard disk drives and the need for flash solutions [8][9] - **Transition to Flash**: The transition from hard disk drives to flash is driven by the need for improved performance, capacity, and efficiency, particularly in light of power and space constraints [10][11] Design Win with Meta - **Collaboration with Meta**: Pure Storage has been working with Meta for several years, culminating in a design win that emphasizes cost savings, power efficiency, and seamless integration into Meta's existing technology stack [12][14][17] - **Technology Licensing Model**: The business model involves technology licensing and royalties rather than direct hardware sales, allowing Meta to leverage its supply chain [24][25] Competitive Landscape - **Limited Competition**: Pure Storage faces minimal competition from third-party vendors, primarily competing against hyperscalers' internal development efforts and existing technologies [28][46] - **Value Proposition**: The value of Pure's solutions is framed around total cost of ownership (TCO) compared to SSD and hard disk drive systems, emphasizing simplicity, reliability, and efficiency [29][31] Storage as a Service (STaaS) - **Growth of STaaS**: Pure Storage has pioneered storage as a service models, which have gained traction due to their flexibility and adaptability to changing customer needs [34][39] - **Outcome-Based Sales**: The approach focuses on SLA-based sales rather than traditional product sales, allowing for ongoing adjustments to meet customer requirements [35][38] Enterprise Storage Market Outlook - **Market Growth**: The enterprise storage market is expected to grow at low to mid-single-digit rates over the next few years, with Pure Storage aiming to capture a larger market share [41][42] - **Strategic Positioning**: The company is well-positioned to engage in strategic conversations with enterprises, offering a comprehensive solution that spans various storage needs [43] Additional Insights - **Storage Tiers**: Hyperscalers design storage solutions across multiple tiers, from high-performance to archival storage, and Pure's technology aims to provide a unified architecture for these diverse needs [50][52] - **Operational Margin Accretion**: The licensing model is expected to be accretive to operating margins, with potential improvements in gross margins as well [32][33]

Financial Data and Key Metrics Changes - Q1 revenue grew 12% year-over-year, reaching $830 million, with operating profit of $83 million and an operating margin of 10.6% [23][26] - Subscription services revenue increased 17% to $406 million, representing over half of total revenue, while annual recurring revenue (ARR) grew 18% to $1.7 billion [25][26] - Total remaining performance obligations (RPO) grew 17% to $2.7 billion, indicating strong renewals and new commitments [25][26] - Total gross margin improved to 70.9%, with subscription services margin at 77.2% [26][27] Business Line Data and Key Metrics Changes - Storage as a Service (SaaS) solutions saw a 70% increase in total contract value (TCV) sales, reaching $95 million, driven by large Evergreen One deals [23][25] - Product margin rose 1.1 points sequentially to 64%, with expectations for mid-60s product gross margin for the year [27] Market Data and Key Metrics Changes - U.S. revenue grew 9% to $531 million, while international revenue increased 21% to $248 million year-over-year [26] - The company added 235 new customers, achieving a penetration rate of 62% within the Fortune 500 [26] Company Strategy and Development Direction - The company is focused on modernizing IT infrastructure and breaking down data silos, with a strong emphasis on AI and high-performance computing solutions [10][15] - A major partnership with Nutanix was announced to integrate their cloud platform with Pure Storage, aimed at enhancing virtualization solutions [12][15] - The company is expanding its cloud block store integration into a fully managed service available through Azure VMware service [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties while maintaining strong performance [18][30] - The company anticipates continued growth in the second half of the year, with a revenue forecast of $845 million for Q2, representing a 10.6% year-over-year increase [30] Other Important Information - The CFO, Kevan Krysler, will be leaving the company after more than five years, with a smooth transition planned [20][21] - The company has a strong balance sheet with $1.6 billion in cash and investments, and Q1 operating cash flow was $284 million [28] Q&A Session Summary Question: Update on hyperscale opportunity with Meta - Management indicated that the evaluation and testing process with Meta is on track, with expectations for significant progress in the second half of the year [39][40] Question: Size of the newly announced AXA offering - The opportunity is seen as niche but substantial, targeting markets like government and large-scale GPU clusters, with expected margins at or above company standards [45][46] Question: Changes in buyer behavior during macro uncertainty - Management noted no significant changes in customer sentiment or purchasing behavior in Q1, with broad-based strength across traditional sales and Evergreen One [51][54] Question: Clarification on subscription margins amid tariff costs - Management stated that they can absorb any potential tariff costs without significantly impacting subscription gross margins [94] Question: Revenue contribution from Meta's one to two exabytes - Some de minimis revenue contribution has been contemplated in the annual guide, expected to be recognized in the second half [72][73] Question: Time to close larger deals - Management reported that larger deals are tracking as expected, with solid momentum in both larger and higher velocity transactions [78]

Financial Data and Key Metrics Changes - Q1 revenue grew by 12%, reaching $830 million, with an operating profit of $83 million and an operating margin of 10.6% [23][28] - Subscription services revenue in Q1 reached $406 million, up 17%, representing over half of total revenue [25] - Annual recurring revenue (ARR) grew 18% to $1.7 billion, while total remaining performance obligations (RPO) grew 17% to $2.7 billion [25][26] - Total gross margin improved to 70.9%, with subscription services margin at 77.2% [26][27] Business Line Data and Key Metrics Changes - TCV sales for Storage as a Service solutions jumped 70% to $95 million, driven by large Evergreen One deals [23] - Product margin rose by 1.1 points sequentially to 64%, with expectations for mid-60s product gross margin for the year [27] Market Data and Key Metrics Changes - U.S. revenue was $531 million, growing 9%, while international revenue was $248 million, growing 21% year over year [26] - The company added 235 new customers, achieving a penetration rate of 62% of the Fortune 500 [26] Company Strategy and Development Direction - The introduction of Fusion 2.0 has been well received, with nearly 100 customers using or testing it [8] - The company is focusing on modernizing IT infrastructure and breaking down data silos, with a strong emphasis on AI and high-performance computing [10][15] - A major agreement with Nutanix was announced to integrate their cloud platform with Pure Storage, enhancing virtualization solutions [12] Management's Comments on Operating Environment and Future Outlook - The near-term view for the year remains largely unchanged despite increased uncertainty in the macro environment [18] - The company expects to deliver 1 to 2 exabytes of solutions to Meta in the second half of the year, with production validation testing on schedule [16][39] - Management remains confident in the ability to outpace competition and grow market share [19][30] Other Important Information - CFO Kevan Krysler will be leaving the company, with a transition plan in place [20] - The company returned $120 million to shareholders through share repurchases and paid $61 million in employee award withholding taxes [29] Q&A Session Summary Question: Update on hyperscale opportunity with Meta - Management indicated that the evaluation and testing process with Meta is on track, with expectations for significant progress in the second half of the year [39][40] Question: Size of the newly announced AXA offering - The opportunity is seen as niche but substantial, targeting government and large-scale GPU clusters, with margins expected to be at or above company standards [45][46] Question: Changes in buyer behavior during macro uncertainty - Management noted no significant changes in customer sentiment or purchasing behavior in Q1, with broad-based strength across sales [51][54] Question: Clarification on subscription margins amid tariff costs - Management expressed confidence in managing tariff costs without significantly impacting subscription gross margins [93] Question: Revenue contribution from Meta's 1 to 2 exabytes - Some de minimis revenue contribution has been contemplated in the annual guide, primarily through a licensing fee model [72] Question: Time to close larger deals - Management reported that larger deals are tracking as expected, with solid momentum continuing into Q1 [78] Question: Comparison of project timelines with Meta and others - The lengthy timeline is attributed to the design cycles of hyperscalers, which include multiple components beyond storage [84][86]

Financial Data and Key Metrics Changes - Q1 revenue grew 12% year-over-year, reaching $830 million, with an operating profit of $83 million and an operating margin of 10.6% [22][24] - Subscription services revenue increased 17% to $406 million, representing over half of total revenue, while annual recurring revenue (ARR) grew 18% to $1.7 billion [23][24] - Total remaining performance obligations (RPO) grew 17% to $2.7 billion, indicating strong renewals and new commitments [23][24] - Total gross margin improved to 70.9%, with subscription services margin at 77.2% [24][25] Business Line Data and Key Metrics Changes - Storage as a Service (SaaS) solutions saw a 70% increase in total contract value (TCV) sales, reaching $95 million, driven by large Evergreen One deals [22][23] - Product margin rose 1.1 points sequentially to 64%, with expectations for mid-60s product gross margin for the year [25][26] Market Data and Key Metrics Changes - U.S. revenue grew 9% to $531 million, while international revenue increased 21% to $248 million year-over-year [24] - The company added 235 new customers, achieving a penetration rate of 62% within the Fortune 500 [24] Company Strategy and Development Direction - The company is focused on modernizing IT infrastructure and breaking down data silos, with a strong emphasis on AI and high-performance computing solutions [7][9] - Strategic partnerships with companies like Nutanix and SK Hynix are aimed at enhancing virtualization and flash storage capabilities [10][15] - The company is committed to maintaining pricing predictability for customers amid tariff-related changes, leveraging its Evergreen model [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties while maintaining strong performance [16][28] - The company anticipates continued growth in the second quarter, projecting revenue of $845 million, a 10.6% year-over-year increase [28] Other Important Information - Kevin Chrysler, the CFO, will be leaving the company, with a transition plan in place to ensure continuity [19][20] - The company reported a strong balance sheet with $1.6 billion in cash and investments, and operating cash flow of $284 million [26] Q&A Session Summary Question: Update on hyperscale opportunity with Meta - Management indicated that the evaluation process with Meta is on track, with expectations to deliver one to two exabytes in the second half of the year [36][38] Question: Size of the newly announced AXA offering - The company views the AXA offering as targeting niche markets, with expectations for margins to be at or above standard company margins [42][43] Question: Changes in buyer behavior during macro uncertainty - Management noted no significant changes in customer sentiment or purchasing behavior in Q1, with broad-based strength across sales [50][52] Question: Revenue contribution from Meta's project - Some de minimis revenue contribution from the Meta project has been included in the annual guidance, primarily through a licensing fee model [69][70] Question: Clarification on subscription margins amid tariff costs - Management expressed confidence that subscription gross margins would not be significantly impacted by potential tariff costs due to operational efficiencies [90][91] Question: Investment expectations for future hyperscaler wins - The company expects to see leverage in design and investment requirements as more hyperscalers are added, reducing costs for future projects [93][94] Question: Revenue linearity throughout the quarter - Management reported typical revenue linearity throughout the quarter, with strong performance sustained [97][98]